State Farm has a new claims process that involves appraisal. The problem for many policyholders is that it often results in payments for amounts less than what the assessment panel decided – sometimes nothing is paid.
How does it work? State Farm has a new appraisal section that reviews appraisal prices from weather events. It consists of four units with about eight adjusters per unit and a manager for each unit. A unit oversees assessments in Florida. A unit oversees assessments in Texas. The other two units monitor assessments from the rest of the 48 states.
We have written and analyzed State Farm’s new valuation language in State Farm New police filing in California should apply to everyone in the property insurance industry – one example is the new appraisal languageand New Requirements to Be a Property Insurance Appraiser – Will Insurance Companies Change Appraisal With New Policy Language? What we did not examine was the change in operating guidelines and processes that State Farm has implemented to reduce the claim rate of losses resolved through the appraisal process.
So, my current plan, to quote Ringo Starr, is to ask for a little help from all my friends. Do you have an example or case where State Farm has refused to pay the appraisal panel̵7;s award? Do you want to share it with me? We want to organize efforts and share information to find out why these assessments are not being paid and to ensure that this new State Farm process is completely in good faith and reflects State Farm’s “Good Neighbor” promise. Heck, we’re inviting State Farm officials in Bloomington who read this blog to provide information on how this all works to expedite our investigation.
An example of how this new process did not work is from a recent lawsuit that Daily & Black won against State Farm in Texas. Here are the facts of the case:
This case arises from a dispute between Dr. Winston and his homeowner’s insurance company, State Farm. In April 2019, Dr. Winston filed a claim with State Farm for hailstorm damage to his home. State Farm paid Dr. Winston based on its inspector’s assessment of the damage. Dr. Winston was unhappy with the payment because the parties disagree on the extent of the damage—specifically, Dr. Winston claims his roof needs to be replaced, while State Farm believes it could be repaired. When the parties reached an impasse, Dr. Winston an appraisal clause in the parties’ contract to determine the actual amount of loss. The evaluation was conducted in October 2019 and found that $91,138.71 was necessary to replace the roof. State Farm continued to argue that the roof did not need to be replaced. As such, State Farm reduced the appraisal award by $91,138.71 and paid Dr. Winston the amount it estimated was necessary to repair the roof, plus some additional funds for other damage to the home. All told, State Farm paid Dr. Winston $28,193.74 for hail damage. At issue in the case was whether State Farm breached the parties’ agreement by refusing to pay $91,138.71 to reimburse Dr. Winston’s ceiling. The case went to trial and a jury found State Farm in breach of contract. The jury awarded Dr. Winston $77,896.71, which is the estimated amount of $91,138.71 to replace the roof minus Dr. Winston’s deductible of $13,242.00.1
In addition to the amount owed under the agreement, the judge had to determine interest and attorney’s fees. The judge ruled that interest added $28,253. The judge then awarded attorneys’ fees of $112,338.60.
State Farm paid more in interest and attorney fees than it withheld from its policyholder. The problem is that in many states there are no prompt payment laws and no awards of attorney’s fees are granted. This case should be example one of why policyholders in every state need policyholder legislation because who would pay an attorney for more than the claim is worth? Why wouldn’t the insurance companies pay high interest rates to cash in on the money they are owed, after being told not once but twice that they weren’t paying enough?
So to all my public adjuster, restoration contractor, roofer and policyholder attorney friends, will you share information and results from State Farm assessments so we can learn more about State Farm’s new assessment process?
Evaluation is supposed to be a quick and cheaper way to solve. But when you have to pay your own appraiser, half the judge’s fee, and then litigate to get what you’re owed, policyholders are being ripped off.
By sharing information about how one of the leading insurance companies treats its customers after a dispute over the size of the loss, we can take the same information as evidence of the need for stronger laws for policyholders.
I feel like the older I get, the more I learn to deal with life. Being on this mission for a long time, it’s about finding yourself.
1 Winston v. State Farm LloydsNo. SA-20-CV-00515 (WD Tex. Aug. 11, 2022).